Digital assets are legal property in China, according to a report published by the People’s Court of China, putting China among a cohort of jurisdictions that have explicitly recognised that property rights apply to digital assets in the same way they do any other, reports Coingeek.
“Virtual currency is not classified as an illegal item. Therefore, under the current legal policy framework, the virtual currency held by relevant entities in our country is still legal property and protected by law,” the document read as quoted by a local news outlet.
The report suggests some openness to digital assets, which reflects a China that has warmed to the industry in recent years. The country doubled down on its ban on digital asset transactions in 2021, with the People’s Bank of China (PBoC) expressing concerns that the use of digital assets breeds “money laundering, illegal fund-raising, fraud, marketing, and other illegal and criminal activities, seriously endangering the safety of people’s property.”
However, neighbouring Hong Kong has made concerted efforts to turn itself into a global digital asset hub and has become a beneficiary of the ban on the mainland. A special administrative region of China, Hong Kong saw state-backed Chinese banks flood into the city to offer services to incoming international firms, leading some to speculate that the region is acting as China’s own regulatory sandbox for digital assets.
The question of whether digital assets amount to legal property is one of the more rudimentary questions posed by the technology. The uncertainty, in large part, comes from the fact that digital assets are created and managed entirely digitally via software operation and are disanalogous to most other forms of property.
As of 2023, the question has largely been answered—at least in many jurisdictions and contexts.
For example, the Internal Revenue Service (IRS) has treated Bitcoin as property since 2014, meaning that investors must pay capital gains tax on each sale.